One-glance verdict
Undervalued
$123.24 our estimate vs market $8.84
Wall Street consensus: $11.43 (-90.7% lower than our fair-value estimate)
Fundamentals snapshot
DXC Technology Company
DXC · NYQ · Technology · Information Technology Services
Current price
$8.84
52-week range
$7.90 - $16.45
Market cap
$1.43B
Balance sheet
Stretched
1.39x Concerning
Net debt $2.51B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
1 Risk
1 rewards · 1 risks
- Reward Free cash flow was positive in 9/10 years.
- Risk Stock trades 302.6% above its 5-year average P/E.
What this company does
DXC Technology Company
DXC Technology acts as a technology department for hire, helping large companies and government agencies run their complex computer systems and update their software. It primarily makes money by managing its clients' digital infrastructure and providing specialized software and consulting, particularly for the insurance industry. This service is important because many organizations pay experts like DXC to handle their complex tech needs so they can focus on their main business.
How the company got here
DXC Technology was formed in 2017 through the merger of two established IT companies: the enterprise services division of Hewlett Packard Enterprise and Computer Sciences Corporation (CSC). This combination created a major new player in the IT services industry, with a long history of serving large organizations that dates back to CSC's founding in 1959. A key event in its more recent history was the 2019 acquisition of Luxoft, a company specializing in digital strategy and software engineering, which expanded DXC's capabilities in higher-value services. The company has since focused on streamlining its business and navigating the evolving technology landscape under new leadership.
What it actually does
Think of DXC Technology as a company that large businesses and government agencies hire to manage their complex computer systems and help them modernize. They don't sell products you'd find in a store; instead, they provide services to help these organizations run more efficiently. This could involve anything from managing a company's data centers (the physical rooms that house computer systems) to moving their operations to the cloud (using remote servers hosted on the internet) and ensuring their digital information is secure. Essentially, DXC helps keep the digital backbone of many major organizations running smoothly and up-to-date.
Global Business Services (GBS)
This part of the company focuses on the 'brains' of a business's technology, helping them improve their operations with modern applications and data analysis. For example, they might help a bank create a new mobile banking app or use artificial intelligence to analyze customer data for an insurance company. This segment earns money by providing consulting, software engineering, and managing specific business tasks for clients, like finance or customer service processes. It represents a significant portion of DXC's business and is focused on higher-value, modern digital services.
Global Infrastructure Services (GIS)
This is the 'heavy lifting' part of DXC's business, responsible for managing the foundational technology that companies rely on every day. This includes services like managing a company's data centers, ensuring their computer networks are running, and providing secure and modern workplace technology for their employees. A large part of this segment's revenue comes from long-term contracts where DXC takes over the responsibility of running a client's IT infrastructure. While a large part of the company's revenue, it has faced challenges as more businesses move to the cloud.
What management is betting on now
DXC's leadership is currently focused on a 'dual-track' strategy: improving the efficiency of its core infrastructure business while also investing in high-growth areas like artificial intelligence (AI) and cloud computing. They are placing a big emphasis on helping customers modernize their existing systems and use AI to improve everything from customer service to data analysis. The company is also focused on strengthening its partnerships with major technology players like Microsoft and Amazon Web Services to deliver more comprehensive solutions to its clients. The overall goal is to shift the company's business mix towards more profitable, high-growth services and deliver more value to shareholders (the people who own the company's stock).
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$190.00M
FY2025 Q2
$154.00M
FY2025 Q3
$568.00M
FY2025 Q4
$238.00M
FY2026 Q1
$143.00M
FY2026 Q2
$365.00M
FY2026 Q3
$359.00M
FY2026 Q4
$169.00M
Revenue
$3.13B
Net income
$-141.00M
Diluted EPS
-0.80
Operating cash flow
$239.00M
Free cash flow
$169.00M
Fetching…
Sources
Revenue
$3.19B
Net income
$107.00M
Diluted EPS
0.61
Operating cash flow
$414.00M
Free cash flow
$359.00M
Fetching…
Sources
Revenue
$3.16B
Net income
$36.00M
Diluted EPS
0.20
Operating cash flow
$409.00M
Free cash flow
$365.00M
Fetching…
Sources
Revenue
$3.16B
Net income
$16.00M
Diluted EPS
0.09
Operating cash flow
$186.00M
Free cash flow
$143.00M
Fetching…
Sources
Revenue
$3.17B
Net income
$264.00M
Diluted EPS
1.42
Operating cash flow
$315.00M
Free cash flow
$238.00M
Fetching…
Sources
Revenue
$3.23B
Net income
$57.00M
Diluted EPS
0.31
Operating cash flow
$650.00M
Free cash flow
$568.00M
Fetching…
Sources
Revenue
$3.24B
Net income
$42.00M
Diluted EPS
0.23
Operating cash flow
$195.00M
Free cash flow
$154.00M
Fetching…
Sources
Revenue
$3.24B
Net income
$26.00M
Diluted EPS
0.14
Operating cash flow
$238.00M
Free cash flow
$190.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $123.24 vs current price $8.84
Wall Street consensus is the average analyst price target: $11.43 (-90.7% lower than our fair-value estimate).
Our most-likely fair value is $123.24 a share — about 1,294.9% above today's price of $8.84, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $2.5B. Interest coverage 1.4x.
Net debt
$2.51B
Interest coverage
1.39x
DXC Technology Company's profit covers its interest bill about 1.4 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
DXC
BASELINE
DXC Technology Company
Total debt $4.25B Interest coverage 1.39x This is the baseline the peer rows are being compared against.
Total debt $4.96B Interest coverage 7.13x +414% vs DXC Carries about 5.1x more debt cushion than DXC.
Total debt $21.30B Interest coverage 14.05x +912% vs DXC Carries about 10.1x more debt cushion than DXC.
Total debt $1.09B Interest coverage 89.92x +6,374% vs DXC Carries about 64.7x more debt cushion than DXC.
Total debt $1.76B Interest coverage 10.34x +645% vs DXC Carries about 7.4x more debt cushion than DXC.
Total debt $2.68B Interest coverage 4.07x +193% vs DXC Carries about 2.9x more debt cushion than DXC.
What you should know
The case for and against DXC
1 Reward
1 Risk
Rewards
-
Free cash flow was positive in 9/10 years.
Risks
-
Stock trades 302.6% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
88.35x
Forward P/E
2.87x
P/B
0.50x
P/S
0.11x
EV/EBITDA
2.94x
PEG ratio
0.49x
Profitability
How much profit each dollar creates
Gross margin
24.0%
Operating margin
-2.2%
Net margin
0.1%
ROE
0.8%
ROA
2.1%
Health
Liquidity and balance-sheet strength
Debt / equity
1.32x
Current ratio
1.36x
Quick ratio
1.20x
Total debt
$4.25B
Total cash
$1.74B
Growth
How the business has been compounding
Revenue TTM
$12.64B
Revenue 5Y CAGR
-6.1%
EPS TTM
0.10
EPS 5Y CAGR
-9.3%
Cash flow
How much cash the business throws off
Operating CF TTM
$1.25B
Free CF TTM
$1.04B
FCF margin
8.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2020-03-24